Chancellor Rachel Reeves will NOT cut cash Isa allowance next week

By: dailymail Posted On: July 11, 2025 View: 28

Updated: 04:56 EDT, 11 July 2025

The cash Isa allowance will remain at £20,000, This is Money understands, after Rachel Reeves put the brakes on plans to cut it.

The Chancellor was widely expected to announce plans to slash the £20,000 tax-free allowance in the Mansion House speech.

Savers will still be able to put up to £20,000 a year into cash Isas with all the interest earned on savings being free from tax.

It was thought the allowance could be cut to £4,000 or £5,000 in a bid to get cash savers investing in the stock market and boost the economy.

However the Chancellor is understood to be seeking to consult more widely with banks and building societies about the best way to shift more money into investments.

Scrapped: Chancellor Rachel Reeves is understood to have u-turned on plans to cut the cash Isa allowance from £20,000

The Government is keeping all aspects of savings policy under review as the Chancellor scrambles to fill a black hole in the country's balance books, it is understood.

The news will offer solace for savers who will not see any changes to the cash Isa for now, though wider Isa reforms have not been ruled out.

The u-turn comes after fierce backlash to the alleged changes to the cash Isa allowance from savers and industry figures alike.

Earlier this week The Building Societies Association penned a letter to the Government warning restrictions imposed on cash Isas could have unintended consequences on the housing market.

Namely, reducing funding for lending, driving up mortgage prices and triggering a housing market downturn.

'This,' it says, 'would undermine efforts to stimulate economic growth, including the Government's commitment to delivering 1.5million new homes'.

Adam French, consumer expert at rates scrutineer Moneyfacts Compare said the move would have sparked 'chaos in the housing market' due to mortgage costs rising.

A Treasury spokesperson said: 'Our ambition is to ensure people’s hard-earned savings are delivering the best returns and driving more investment into the UK economy.'

Now commit to leaving cash Isas alone, says JEFF PRESTRIDGE

After months of speculation – and campaigning by The Daily Mail and This is Money – the Chancellor has put a pause on slashing the cash Isa allowance. Commonsense, not something that Ms Reeves has demonstrated in abundance since becoming Chancellor, has prevailed. Hurrah, twenty thousand times over.

As we – and others such as the chirpy Building Societies Association have been saying for most of this year - cutting the annual cash Isa limit from £20,000 to £4,000 never made sense.

In a month of Sundays, it would not have persuaded more of us to invest – rather than save – into an Isa, as was the Chancellor’s hope.

People of all ages save in cash for all kinds of reasons – building a deposit to put down a first home, accumulating a stockpile against financial emergencies, and to see them through retirement. They have no desire to invest beyond maybe via their pension.

Cash Isa savers shouldn’t put the flags out quite yet. What we have been told is that Isa reform has been put on hold pending more consultation. So, there is still a chance that come the Budget in the autumn, the Chancellor could well reduce the cash Isa limit.

My hope is that she will steer away from going down this wrong path. Yes, we need to encourage greater investing amongst the public, but not by discriminating against cash savers.

The sooner the Chancellor commits to a £20,000 annual cash allowance, the better. Commonsense must prevail.

SAVE MONEY, MAKE MONEY

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